Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

Ply Gem Highly Leveraged To New Housing

If investors want to own stocks leveraged to a recovery in new home construction in the U.S., it's hard to do better than Ply Gem (NYSE:PGEM) in terms of sheer end-market leverage. Distributor Builders First Source (NASDAQ:BLDR) has more overall leverage to new housing construction, but at nearly 50% of sales, Ply Gem is well ahead of companies like Masco (NYSE:MAS) and Fortune Brands (NYSE:FBHS), and is roughly on par with Louisiana-Pacific (NYSE:LPX).

It takes more than just good end-market exposure to be a long-term winner, though, and Ply Gem certainly has work to do in improving margins and cleaning up its balance sheet. Although I think management has a...

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